Friday, February 27, 2015

What would be "insanely great" now is a computer, tablet, etc. that is made to last a decade and software that was supported for the entire period.

I hope some of you will understand why I hang on to my original 1984 Macintosh computer. Thanks to macfaq.com, I recently discovered that my Mac model 0001 was the 21,447th made in week 32 of 1984 in Fremont, California.

My business partner and I bought three Macs (the 128K Model 0001) in August of 1984, at a horrendous cost per unit. As I recall, the initial retail price was around $2,500, which soon dropped to $2,300. This is still over $5,000 in 2014 dollars.

Early adopters will remember arduously swapping the 3.5-inch "stiffy" floppy drives to load applications and save files to disk.

Given these limitations, we soon spent another $1,000 per unit to upgrade to the 512K motherboard, and thousands more on external 800K drives, dot-matrix printers, memory upgrades and by the late 1980s, early-generation hard drives (a whopping 20 MB or 40 MB each, as I recall).

Some of these early Macs included a photo of the factory workers in front of the Fremont plant.

Though the original Mac looks outdated, the Mac manuals from 1984 are remarkably timeless: lots of white space on each page, cleanly formatted, etc. The Mac was not just a computer--it was a complete package of software (MacWrite and Microsoft Multiplan, the Excel precursor) and the manuals to guide a generation of neophytes.

What's equally remarkable is how the Mac interface is completely natural to any child using an iPhone, tablet, etc. today: the desktop, icons, pointing device and pulldown menus were all there in 1984.

What's been added to computers in the three decades since are: more processing power, more memory, a touch-screen and connections to the Web and other networks.(The Mac had a proprietary Apple networking protocol, AppleTalk.)

In rummaging through some boxes in the garage, I found my old 1984-vintage Mac and a 1995 replacement. The 1995 Mac's hard drive started spinning but couldn't boot up. The 31-year old original Mac, after sitting untouched in a box for at least 15 years, booted System 6 from an external floppy disk drive in a matter of seconds.

Wow. It made me wonder: how many electronic devices made today will boot up 31 years from now after sitting in a box for 15 years? It also made me wonder: if the original Mac can last 30+ years, why do we need to buy new PCs, etc. every few years?

Computing has already reached diminishing returns on processor speeds and additional memory. Faster processors and additional memory no longer make much of a difference except in a few settings. There is little reason to buy replacement PCs, tablets, etc. other than to keep up with the software industry's planned obsolescence, i.e. no longer supporting previous versions of software.

Is it really impossible to build a computing device and screen that will last 10 or more years before failing? If the returns on processor speeds and memory are diminishing, why couldn't we use the same hardware and software for a decade or longer?

The tech industry has gorged itself on a replacement cycle of 2-3 years for decades.The reasons for these rapid replacement cycles are disappearing as the benefits from each new cycle decline. Indeed, many users would prefer to use software that they have become comfortable with, and being forced to adopt software that is essentially the same with minor tweaks is not only wearisome, it's inordinately costly.

What would be "insanely great" now is a computer, tablet, etc. that is made to last a decade and software that was supported for the entire period. The auto industry offers an example of an industry that was once dependent on people buying new cars every few years. It has somehow survived as people hang on to their cars for 8, 10 or even 20 years. (Our Honda Civic is 17 years old and still going strong on the original engine and tranny).

How did Apple build a Mac in 1984 that still boots up today, 31 years later? How much would it cost to assemble components that were designed to last a decade instead of a few years? Would there be a market for a device that costs more but is guaranteed to last a decade? I think the answer is yes, if the software was also supported for the same time period.

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers (25 minutes, YouTube)

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Robert B. ($100), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Thursday, February 26, 2015

The dragon tail of Marx's end-game of overcapacity and finance capital is about to shred China's fantasy that the state can micro-manage both capitalism and financialization with no contradictions or consequences.

Longtime readers know my one expertise is annoying the entire ideological spectrum in 1,000 words or less. Today is one of those days, so strap on your blood pressure monitor and prepare for full-spectrum annoyance, regardless of your ideological leanings.

Marxism is typically considered discredited outside of a few protected fiefdoms of academia which tend to engage in obscure debates over the labor theory of value and other signifiers of membership in the inner circle of deep Marxist thinkers.

Outside these cloistered academic circles, Marxism is dismissed for two basic reasons:

1. the predicted final crisis and implosion of capitalism did not occur

2. the vaguely outlined post-capitalist incarnation of a stateless worker's paradise not only failed to materialize, but was used to justify destructive, murderous totalitarian regimes.

But those egregious failures of Marxist theory should not blind us to the value of his critique of capitalism. After all, he was writing in the first stages of industrialization and global finance (late 19th century), and his failure to detail a scientific socialism beyond capitalism can be chalked up to a mix of naive idealism and a paucity of theoretical models to build on.

Ironically, the one successful state that claims to be founded on Marxist principles, China, is poised to prove his analysis of capitalism's implosion was fundamentally sound. Consider two major parts of Marx's analysis of capitalism:

1. the consequences of overcapacity and competition

2. the dominance of finance capital over industrial capital

Marx foresaw that the consequence of overcapacity and competition is the collapse of profits which leads to the collapse of wages and most competitors. If there is any single word that defines China now, it's overcapacity.

This is not a new dynamic; when I first visited China in 2000, the TV set industry was already suffering from overcapacity/overproduction and a resultant collapse of profits.

What can any enterprise do when competition and overcapacity slash profit margins to near-zero? Slash payrolls and wages. Profit margins are famously razor-thin in most Chinese industries, and despite wages that are a fraction of U.S./E.U. wages, automation of production lines is the only solution to Chinese companies beset by fierce competition and overcapacity in their sector.

Automation only provides a brief competitive advantage, as one's competitors are busy lowering their input costs by automating production.

Marx understood that the end-game of overcapacity is a reduction of capacity via bankruptcy and the establishment of competition-killing monopolies. This is the stage of collapse that lies just ahead for the majority of Chinese industrial players.

The equally devastating parallel implosion of factory jobs will crush demand. The social safety net in China is threadbare compared to the West; laid off workers get little compensation or retraining; most face a return to rural villages and subsistence incomes from farm work that have dwindled to a few hundred dollars a year as a result of state policies that have made food cheaper for poor urban workers.

If there is any major economy that demonstrates the dominance of finance capital over industrial capital, it's China. The entire boom since the global financial meltdown in 2008 has been financed by cheap credit, leverage and speculative lending in an opaque shadow banking sector.

Compare China's bank assets with those of the U.S., which has an economy of roughly the same size:

It doesn't matter whether the banks are owned by the state or not; the net result is the same: massive malinvestment as productive investment is abandoned in favor of speculation.

If any nation is poised to reap the consequences of rampant financialization, it's China. In the global downturn that's just starting, China won't be able to boost capacity as a solution--the economy is already being crushed by overcapacity in virtually every sector.

It also can't turn to the financialization save of unlimited expansion of credit and dodgy leverage--financialization has already been pushed to the redline. there is nothing left except diminishing returns on additional expansions of credit and leverage.

Marx is about to demolish the fantasy in China that financialization can be controlled by the state. Losses can be covered over and the next expansion of credit is just around the corner. Nice, but credit doesn't create jobs lost to overproduction, nor does it generate profits, nor does it generate collateral for the next round of shadow banking speculation.

What Marx did not foresee is the critical role of the state in enforcing private monopolies and the predations of financialization. While Marx understood the parasitic nature of Monopoly Capitalism, he did not anticipate the State's partnering with Cartel/Crony Capitalism. In effect, the Chinese State is now so dependent on financialization that it stripmines the citizenry to protect the financial sector from the consequences of their business model (excessive credit, leverage, fraud, embezzlement and the misrepresentation of risk). But the Chinese State doesn't merely enable the predation of its crony financiers; it also stripmines the citizenry to fund its own expansion into every nook and cranny of civil society.

The dragon tail of Marx's end-game of overcapacity and finance capital is about to shred China's fantasy that the state can micro-manage both capitalism and financialization with no contradictions or consequences. "Dragon Seeks path. Dragon whips his tail." The dragon of capitalism isn't as easy to control as bureaucrats expect.

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers (25 minutes, YouTube)

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Daniel D. ($60), for your stupendously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Wednesday, February 25, 2015

When the system is set up to encourage maximizing self-interest, accountability for the whole is lost.

The lessons drawn from the U.S. healthcare system's failures can be fruitfully applied to a variety of large-scale problems around the world. Let's start with an insightful look at the fixes that have largely failed to rein in costs and improve actual care/patient health.

"Physician Praveen Arla is witnessing a reversal of health care fortunes: Poor, long-uninsured patients are getting Medicaid through Obamacare and finally coming to his office for care. But middle-class workers are increasingly staying away.

"It's flip-flopped," says Arla, who helps his father run a family practice in Hillview, Ky. Patients with job-based plans, he says, will say: " 'My deductible is so high. I'm trying to come to the doctor as little as possible. … What is the minimum I can get done?' They're really worried about cost."

It's a deep and common concern across the USA, where employer plans cover 60% of working-age Americans, or about 150 million people. Coverage long considered the gold standard of health insurance now often requires workers to pay so much out-of-pocket that many feel they must skip doctor visits, put off medical procedures, avoid filling prescriptions and ration pills — much as the uninsured have done."

The average hourly wage is nearly identical to what it was 50 years ago in today's dollars: $19.18 in 1964 compared with $20.67 in 2014, according to U.S. Bureau of Labor data analyzed by the Pew Research Center. Meanwhile, U.S. health spending ballooned from 5% of gross domestic product in 1960 to 17% in 2013."While I have often discussed unintended consequences of centralized policies such as ObamaCare, my focus today is how U.S. healthcare perversely reflects the Tragedy of the Commons, the seminal paper by Garrett Hardin which described the failure of the market to value/price communally owned assets, i.e. "the commons."

Here is a basic example of the dynamic: Each individual farmer will graze his cattle/sheep on the communally owned pastures ("the commons") to boost his own profit, since the commons are "free". This exploitation of what the market has determined is "free" leads to overgrazing and the destruction of the commons--a huge loss to the entire community as well as to the farmers who were grazing their animals in the commons.

When everyone sees the commons as "free for the taking," then the commons is soon destroyed for all.

To the degree that Central State (federal) revenue is a form of public commons (since it is collected from taxpayers), the siphoning of that resource to serve individual gain leads to the loss of the commons, as well as the loss of any notion of the "common good."

This dynamic is reflected in the extraordinary expansion of healthcare's share of the national economy, from 5% to 18% (on its way to 20%). While healthcare for practioners is about patients, from the financial point of view, healthcare is focused on increasing revenues and profits by whatever means are necessary.

Financially, the commons (tax revenues) are being stripped by those with the most political power.

Though we don't normally think of the health of a nation's citizens as a commons, I think this makes a lot of sense. After all, the healthier a population is, the more productive and happy it will be, and that serves the interests of the nation and its citizenry.

From this perspective, we have to ask if the enormous expense of healthcare is improving the health and happiness of the populace as much as it could, were it spent more effectively. I think it is fair to say that the overall health of the U.S. populace is actually declining, despite modest advances in longevity and survival rates.

This does not reflect any lack of effort from the often-overworked providers--rather, it seems to reflect a deterioration of the populace's own habits and lifestyles, and the lack of focus and accountability of the entire system.

We can trace this failure to the Tragedy of the Commons: when every participant is driven to seek maximum gain from exploiting the commons for their own interests, no one is accountable for protecting the commons as a whole.

When we ask, who is responsible for improving the overall health and well-being of the citizens, we get an answer that boils down to: everyone and no one.

When the system is set up to encourage maximizing self-interest, accountability for the whole is lost. And once accountability for the effectiveness and health of the whole system is lost, the system will degrade and eventually collapse, for the same reason that unrestricted grazing by individuals eventually destroys the commons.

Put another way: if I concern myself with the health of the commons (or the overall health of the populace), I earn nothing for this work. Even worse, while I devoted myself to the common good, someone else increased his herd grazing the commons. I will eventually be forced to either join in the exploitation or go broke.

That's the Tragedy of the Commons dynamic, and I think it applies to many systems around the globe.

This essay was drawn from Musings Report 5 (2015). The weekly Reports are sent exclusively to subscribers and major contributors ($50 or more annually).

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers (25 minutes, YouTube)

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Frank M. ($100), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Tuesday, February 24, 2015

Everything made with cheap, unreliable parts/components will break down long before the entire assembly has lost its utility.

In Here's What's Wrong with Corporate America--and the U.S. Economy (December 17, 2014), I concluded that once Corporate America books the sale, they're done with customers.Customer service after the sale (when the upfront profits are booked) is a Kafkaesque tragicomedy of Orwellian narratives: Corporate America publicly worships customer service but delivers none of the real thing. Instead, customers are abandoned in a frustrating Circle of Intermediary Hell, where phone calls are shunted elsewhere and third-party repair crews show up weeks later with the wrong information and leave broken appliances disassembled.

But this is only half the story: the other half of the story is products are now manufactured to be virtually impossible to repair at a cost lower than the price of a new replacement. U.K. technician Doly Garcia explains this half of the story in detail.

As someone who has spent my adult life building, repairing and maintaining everything from major buildings to computers, I find her account matches my own experience.

Here is Doly's commentary:

"Your post about the problems with getting an appliance repaired was something I know a little about, since my main job is repairing electronic equipment. I live in the UK, not in the USA, but the situation is pretty much the same over here. And by the way, I'm female. Not that it makes any difference to what I have to say next, but just to mention I was pleased that you used the word 'repairperson'.

I think you have clearly realised there is a problem, but you haven't seen yet how big the problem is. As I see it, the crux of the issue is that the appliance was assembled in "Robotic factory #2" in China.

When something is assembled by robots, the appliance was designed to optimize assembly by robots. It was not designed to be easy to take apart by humans. Robots are cheaper than human labour, even in China (or they wouldn't have robotic factories in China). This means that the cost of assembly of a new item is peanuts compared with the cost of having a human take apart and put together again an old item, especially if that human is expecting to earn a decent American or European wage and also expects not to be overworked (a common enough situation in China). This automatically makes even rather simple repairs uneconomic.

Then, there is the issue of getting the parts. Some of the parts may be impossible to identify by a human because they don't have a part number on them, you can only figure out what they are by contacting the manufacturer, and the manufacturer usually won't be happy to give that information. And of course, if the appliance was made in China, most or all of the parts will be from China as well. So it may not be easy to source them.

Just about everything nowadays is made with the intention that only the manufacturer, or somebody who has a formal business relationship with the manufacturer, will be able to repair it. From the point of view of the manufacturer, every time that somebody repairs something without their help, that's money they are losing. Ideally, they want customers to buy a new gizmo, and if they can't be persuaded to that, they want at least to get a cut on the repair. So you have to become an official certified repair technician for some Big Manufacturer in order to get the business. But they'd much prefer that nothing be repaired, it's too much hassle and they make more money selling new stuff.

People that know how to do repairs are, quite literally, a dying breed. There's less and less of us all the time.

The status quo works beautifully for manufacturers right now, but it's based on a number of assumptions that may or may not hold in the future:

1. China won't have any major problems that affect its manufacturing capacity.

2. Relationships with China will continue to be smooth.

3. Transport to and from China and electricity in China (to run robots) will continue to be dirt-cheap.

4. People in Western countries will continue to be able to afford the next new thing.

If any of those stops being true, the whole current system would crumble. And I'm not quite sure of what plan B would look like.

It may look superficially straightforward: Hey, let's bring the factories back to the West. But that would require quite a lot of capital, and the sort of scenarios I mentioned above aren't the sort of scenarios where most companies would be flush with capital. And in many cases it would bring up the prices of stuff - after all, there was a reason why the factory was moved to China.

Alternatively, companies could start designing stuff so that it's reasonably easy to repair, which was the standard way of designing things not so long ago. But manufacturers are unlikely to go down that route unless they have to because people just aren't buying many new things. And I can tell you, after a few years of sluggish economy, manufacturers still haven't changed their ways. It's going to take quite a lot more.

In the meantime, people are already suffering the consequences, though most of them don't know it yet. To give you an example, here in the UK, cuts to the National Health Service means that most hospitals are having serious trouble to get their accounts to add up. One of the jobs I'm doing right now is repairing the handsets used to call nurses and switch on lights that go on hospital beds. It's an essential piece of equipment, because without it the bed can't be used. I've been doing it for a couple of years now, and unsurprisingly, it's getting to the point that some of the handsets really should be thrown away.

But the hospital maintenance people always beg not to throw any away, because they can't afford to buy new ones. Unfortunately, some of the problems can't be repaired satisfactorily. Plastic bits get broken and, though I can glue them again, the fix isn't too good and it doesn't last as long as I would like. It's of course impossible to get the plastic case I need from the manufacturer, and these things are made with industrial moulds. There is no small-scale way of making a plastic piece of the required quality.

(I only know of one story of an individual working at small scale that dared to pay for an industrial-scale plastic mould, that ended happily for the individual concerned: it was Alan Sugar, asking for a particularly popular TV casing. That's how he started his fortune, but it nearly bankrupted him in the process.)

You may have heard about 3D printers and think it's the solution, but often it isn't. The surface of a 3D printed object is not smooth, which is often a problem. And anyway, in this case the part has an additional laminated cover attached to it that, again, is the sort of thing that can only be done industrially at a large scale."

Thank you, Doly, for this comprehensive overview. There are a number of critical issues raised in Doly's commentary: the wasteful processes of manufacturing products that cannot be repaired and must be dumped in the landfill (or recycled, a non-trivial and costly process itself), and the decline of generalists--people with the skills and experience to do more than one narrow slice of work.

Ironically, modern manufacturing processes lower the value of generalists; since it's almost impossible to repair products for a low cost, there's no demand for people who can fix a wide variety of things. These skills have atrophied to the point that many young people have no idea how anything is made or how it works.

Few people can even change the oil in their car or adjust the brakes on a bicycle, much less replace a sensor on a modern auto engine, repair an appliance or swap components in a PC.

But this loss of repair skills may be changing, thanks to YouTube University: a phenomenal range of repairs can now be learned online via YouTube videos.

As for unrepairable products: one choice is to buy used products from a earlier age that are repairable.

No matter what the brand, the product is only as reliable and durable as its lowest-quality part/component. That's the core problem with products that are difficult/costly to repair: everything made with cheap, unreliable parts/components will break down long before the entire assembly has lost its utility.

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.

And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers (25 minutes, YouTube)

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Rick R. ($108), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Monday, February 23, 2015

The point I'm making with the $10 trillion stone coin is that if money is a social contrivance, then it should be distributed to those creating goods and services.

You've probably heard of the $1 trillion platinum coin proposal: the basic idea is the U.S. Mint issues a $1 trillion platinum coin, and returns the difference between the cost of minting the coin (trivial) and the face value attributed to the coin ($1 trillion) to the United States Treasury General Fund.

This difference is known as seigniorage. The federal government could then spend the $1 trillion without having to borrow the money by selling Treasury bonds--the usual mechanism for funding federal deficit spending.

The idea was originally proposed as a way of avoiding more federal borrowing:rather than borrow another $1 trillion to fund federal spending, the Treasury would be handed $1 trillion in freshly created cash as seigniorage proceeds from the $1 trillion coin.

Is the idea legal? Some scholars say yes, others are doubtful.

The point of the $1 trillion platinum coin is to create money out of nothing and do so outside the Federal Reserve, which creates money out of nothing but balances that debit by buying Treasury bonds, which are booked as an asset.

Some observers have suggested minting a $1 trillion platinum coin and having the Fed buy it as an asset--in effect, replacing $1 trillion in interest-bearing Treasury bonds with the $1 trillion coin.

The $1 trillion coin is interesting, but given the size of the nation's debt and the relatively unimpressive size of the coin itself, I propose a $10 trillion stone coin, which could be purchased from the island of Yap for considerably less than $10 trillion.

The coin could be sited somewhere on the Mall in Washington D.C., where it might become a tourist attraction.

In Yap, these are known a Rai stones, and they are money in the sense of being a store of value that can be transferred via oral history rather than physically moved.

Thus the $10 trillion stone coin could actually remain on Yap and serve its purpose equally well. However the potential value of the stone coin as a tourist attraction probably makes its transport to D.C. a worthwhile investment.

Here's how the $10 trillion stone coin works: the Mint duly issues one $10 trillion coin and transfers the $9.95 trillion seigniorage (recall that there are shipping costs from Yap to D.C.) to the U.S. Treasury.

All federal Social Security payroll taxes are cancelled for ten years, providing a payroll tax holiday for employers and employees alike for a decade. (Payroll taxes are about $1 trillion a year.)

Compare this with the current method of creating money out of thin air--the Fed creates the money and then distributes it as free money for financiers to speculate with. As Paul Krugman has observed, "money is a social contrivance." Right now, we create money to enrich the already wealthy. That's how we use our social contrivance--to widen the social divisions of the nation.

The dangers of creating trillions of dollars out of thin air are obvious. When money is "free," there is no discipline to insure the money is invested or spent wisely. Waste and fraud are as good as prudent investing in the Keynesian Cargo Cult distribution of credit to wealthy financiers. Vested interests with influence over federal spending are delighted to increase their share of the swag, further enriching Elites.

If creating money is such a good idea, why not let all of us do so? Why not let everyone print as much as they need to get what they want?

The answer is of course runaway inflation, as money that can be issued by everyone in unlimited quantities is instantly rendered worthless.

The point I'm making with the $10 trillion stone coin is that if money is a social contrivance, then it should be distributed to those creating goods and services, not those with influence over easily-bought politicos.

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers (25 minutes, YouTube)

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, John D'A. ($50), for your splendidly generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Sunday, February 22, 2015

The political-financial drama Grexit was greenlighted for a 5th season, as new characters and new narratives have reinvigorated a series that was clearly flagging in mid-2014. Given the sleepy subplots that dominated the 2014 series, industry insiders were anticipating a cancellation.

But with the introduction of new leads Alexis Tsipras and Yanis Varoufakis, veteran cast members Wolfgang Schäuble and Christine Lagarde must now grapple with a new field of canny adversaries and new obstacles.

"It's no secret the first two seasons in 2011 and 2012 were spectacular," One industry veteran told us. "It was one cliffhanger after another. But the last two seasons went downhill. Austerity just isn't that compelling, and the subplots that made the first two seasons so enjoyable lost their narrative edge."

When the authenticity of Christine Largarde's sun-kissed tan became a plot point, sources reckoned the series had exhausted itself.

Suddenly, a veritable cornucopia of emotionally gripping narratives have emerged: old vendettas from World War II, the underdog Greeks versus the German oppressors, the responsible Germans versus the profligate Greeks, the slim margin of victory held by the new team of Tsipras and Varoufakis, and numerous subplots as the Troika leaders make public announcements while wheeling and dealing behind closed doors.

"It boils down to 'will they or won't they' (leave the euro), but like all relationship dramas, the fun is in the personal battles and the plot twists," the industry veteran explained. "From what I hear, the season finale is still very much up in the air."

The series' ratings, which had eroded steadily through 2013 and 2014, have soared in 2015, and everyone involved with the series is newly energized.

One cast member spoke with us confidentially. "The great draw of Grexit is the Rashomon-like nature of the story. Each protagonist is the villain to half the audience and a hero to the other half. There are multiple love-hate relationships simmering in each episode."

One of the production team noted the new season's dramatic turns occupy the world stage. "Though Greece has a limited role in Europe, and is a bit player globally in terms of population and GDP, it's managed to secure a global spotlight on center stage with the drama of Grexit. This goes to show the power of a good conflict with strong characters facing multiple obstacles and plot twists."

Though there had been rumors of a two-year extension, recent gossip has this season's finale ending the series in a high-stakes showdown. Insiders would neither confirm nor deny the rumor, but they promised a "show unlike any other" this season.

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers (25 minutes, YouTube)

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Kenneth C. ($60), for your stupendously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Friday, February 20, 2015

Are we entering a cultural Dark Age, where the talented cannot earn a living creating culture?

Longtime correspondent G.F.B. recently sent me this 13-minute Interview with Andrew Keen. This is my first exposure to Keen, and his view that the democratization of the Web is great for politics but a disaster for what he calls the Cultural Economy-- the relatively small but important slice of the economy that pays creators and artists to make culture: music, literature, art and serious journalism.

Keen touches on a great many ideas and themes in this brief interview, but his core point is this: by enabling everyone to express themselves on an essentially equal footing, the Web has undermined legitimate journalism and buried the talented few in an avalanche of mediocrity--in his words, talent is "lost in a sea of garbage."

By eliminating the middleman who added value by sorting the wheat from the chaff--the film studio, the music labels, the publishers--the Web has created a cultural landscape where "soft, ordinary" content such as cute cat videos garner the most "likes" and clicks--the digital world's metric for popularity and thus value in the marketplace.

Keen tossed off one of his most interesting ideas as an aside: that the break-up of community and the resulting loss of identity has generated a universal drive to establish an identity via self-expression: everybody feels they can compose a song, write a novel or make a movie.

Keen is at his most provocative (to the democratized ideal of the amateur making it big) when he declares the vast majority of people are talentless: talent is by definition scarce. We can't all be equally talented, nor can anyone generate culturally valuable content without mastering their craft over thousands of hours of practice.

Keen unapologetically calls the previous arrangement an "industrial meritocracy." He feels this hierarchical meritocracy is being destroyed and there is nothing to replace it. This will result in a cultural Dark Age where the talented cannot earn a living creating culture. The only avenue left for creators of content that can be copied and distributed digitally (music, digital art, writing) is to find wealthy patrons to support their work.

One of G.F.B.'s points in our conversation was the Web's "level playing field" is an artificial construct, much like the playing field in a stadium. But outside the stadium, the topography is anything but level. Put other way, global corporations have great advantages in the supposedly "level playing field" of the Web.

Keen mentions that what will remain scarce in this tsunami of digital content is access to the artist, live performances and art that cannot be digitized, such as sculpture and paintings. As I have discussed in previous Musings, musicians who perform constantly can make a living in this environment, because their free music on the web builds an audience for their live performances. But not every band performs enough to make a go of this model.

In Keen's view, it is now essentially impossible for bands, artists and writers to create a "brand" that will generate an income. Only those creators who entered the digital age with an established brand can leverage their recognition into an income.

As a completely marginal creator of content who never rose within the industrial meritocracy lauded by Keen, I think Keen makes some excellent points but overstates his case for a cultural Dark Age.

As G.F.B. pointed out in our conversation on this topic, a new class of curators is arising within the Web, people who sift through the vast outpouring of content and select the best or most interesting (in their view). Those curators who succeed are adding value just as the industrial middlemen did in the pre-digital model. In some small way, I think Of Two Minds performs a bit of this curation.

It seems to me that the digital age requires every creator of content to not only be perseverant but to focus a great deal of time and energy on marketing their content--precisely what the industrial media and cultural industrial-model companies once did for their talent.

There is no longer enough money in creating content to pay an office full of people to issue press releases and arrange book tours. In the publishing world, promotion is increasingly up to the authors; as Keen noted, only those authors with brands that were established in the pre-digital age can sell enough content to support industrial-type promotion.

We can bemoan this, or we can grasp the nettle and realize that it is no longer enough to practice one's craft for the fabled 10,000 hours--one must also invest another 10,000 hours in promoting and marketing one's content/cultural creations. That dual process (creation and marketing) is so arduous, so impoverishing, so demanding, only the driven few can sustain it long enough to claw their way through the mountains of mediocrity.

Making a living at cultural content was always brutally Darwinian; perhaps all that's changed is the nature of the Darwinian selection process.

This essay was drawn from Musings Report 51 (2014). The weekly Reports are sent exclusively to subscribers and major contributors ($50 or more annually).

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers (25 minutes, YouTube)

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Cheryl A. ($100), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

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